December 17, 2014

End Of Year Reruns

It's the time of year when lazy-ass bums don't feel like working. So,
as is customary, I am filling the blog for the rest of the year with
stuff from 2014 that I liked. Here's a 2-part series on social media we did in
January:

The Slow Painful Collapse Of The Social Media Marketing Fantasy

PART 1

It was going to change business forever. It was going to
make traditional advertising irrelevant. It was going to revolutionize
marketing.

It was social media marketing. And it's been the biggest disappointment since the NFL hired referees.

While
advocates for social media still cling to the wreckage of "the
conversation" and continue to hound us with apocryphal tales of social
media magic, dispassionate observers are starting to realize what a
delusion the whole theory of social media marketing has been.

The
idea that consumers were enthusiastic about having conversations about
brands online, and they would activate their network of friends and
followers to share their enthusiasms and create a socially transmitted
tsunami of sales has proven to be deeply fanciful.

It
turns out that the average consumer has a lot more on her mind than
conducting online conversations about fabric softener. And the ones that
do seem to have no ability to generate enthusiasm in others.

While
people with a financial or ideological stake in social media continue
to propagate the fantasy, those annoying, troublesome things called
facts keep popping up to undermine their careless assertions.

The
first crack in the wall came in 2011 when the largest, boldest
experiment in social media marketing ever attempted -- the Pepsi Refresh
Project -- was exposed as a nasty failure that seems to have cost the brand 5% of its market share, which it has never recovered.

"Social
tactics are not meaningful sales drivers. While the hype around social
networks as a driver of influence in eCommerce continues to capture the
attention of online executives, the truth is that social continues to
struggle and registers as a barely negligible source of sales..."

A few months later, a story in The Wall Street Journal
reported on a study IBM had done on the effect of social media on Black
Friday sales. While sales were great, the social media contribution to
sales were essentially nonexistent.

Shoppers referred from Social Networks such as Facebook, Twitter,
LinkedIn and YouTube generated .34 percent of all online sales on Black
Friday, a decrease of more than 35 percent from 2011.

The Journal commented...

"...there’s one notable under-performer in the online shopping frenzy: social media."

But perhaps the most damning report on the negligible influence that social media marketing has on sales was issued a few days ago by McKinsey & Company.

This sentence from the report says it all:

“Email
remains a more effective way to acquire customers than social media -
nearly 40 times that of Facebook and Twitter combined."

We're talking about email here, not the Super Bowl. Email 40 times more effective than Facebook and Twitter combined? Now that's frightening.

The
social media fantasy is in a death spiral. Social media marketing is no
longer taken seriously as a sales builder by anyone with a functioning
cortex.

Social media marketing will continue to be strangely popular and sporadically effective in some small niche categories.

But when it comes to serious brands, in the vast majority of cases it is evolving into just another cost of doing business.

PART 2

It seems like only yesterday we couldn’t turn on the TV,
open a magazine, or go to a website without someone exhorting us to “join the
conversation.”

“The conversation” was the physical manifestation of the
marketing industry’s fascination with social media. The idea was that
people were highly interested in our brands and would be eager to chat and share
their enthusiasms on line with other people.

The philosophical seeds of this conviction were planted in
the mid-1990’s when it was postulated that the “interruption model” of
advertising had run its course. The theory went something like this:
consumers were no longer responsive to advertising messages like TV spots,
radio spots, and magazine ads which interrupted their activities. Instead,
marketing was transitioning into a period in which the “permission model” would
dominate.

The “permission model” posited that in order to be
effective, marketers had to stop bothering people with advertising, and instead
gain their permission to market to them.

The way you got permission was to engage consumers with useful,
interesting messages (currently known as “content”) that gave consumers value
instead of sales pitches. If you did this, they would trust you, like you
better, and permit you to market directly to them. In marketing terminology,
they would “opt in” to your marketing programs.

Best of all, they would share their passion for your brand with their
network of friends and followers who would, likewise, share with their network.
A multiplier effect would be born.

There was only one problem with this wonderful proposition. It misinterpreted
consumer behavior by substantially overestimating consumers’ fervor for brands, and
concomitantly misjudging consumers’ inclination to share their
presumed fervor.

Believers in this ideology assumed that a person's use of a product was ademonstration
of enthusiasm for the brand. Sadly, in
the vast majority of cases, it is merely an indication of habit,
convenience, or mild satisfaction. It is not proof of devotion or enthusiasm.

Regardless
of the time, energy and money we spend “differentiating”
our brands, most people see very little difference between our brand and
our
closest competitors. While there are some brands that people do have
great loyalty to, and some categories that people are truly interested
in, these are the rare exceptions. In most cases people will change
brands with very little bother if
it turns out to be convenient or otherwise beneficial.

Most people will gladly switch from Skippy to Jif if they can save a
buck or two. If the ballpark doesn’t serve Coke, most people will happily
return to their seats with a Pepsi.

The idea that social media would become a channel in which
consumers would share their strong enthusiasms by having “conversations about
brands” has turned out to be largely a delusion.

Most brands are finding that their social media programs are
more time-consuming, more expensive, and less capable of driving sales growth
than
was promised. Consequently, they are abandoning the “permission model”
and reverting to the “interruption model” in their online advertising.You can see this most clearly on Facebook. Facebook
calls itself a social medium, but its advertising model is good
old-fashioned paid advertising plastered all over the page. Compare the
number of paid ads you see on your Facebook page with the number of "conversations about brands."

The reason is clear: marketers are finding that they can get more value out of these websites by treating them as avenues for advertising, not conversations.And, just a reminder, Facebook, YouTube, Twitter, etc., don't make money from us having conversations about yogurt. They make money the old-fashioned way -- they sell ad space.

Social media are quickly evolving
into just another channel for delivering traditional interruptive advertising.

It is also not surprising that the social media lobby has learned another lesson from traditional paid advertising. When you point out to them that they're not very good at generating sales, they default to the universal excuse for failed advertising -- it's not about sales, it's about branding. Whatever the hell that means.

Social
media is not going to die or go away. It will continue to grow. But the
fantasy of consumers having conversations about brands and sharing
their passion for brands -- and the claim that this will replace or
surpass traditional paid advertising -- is simply collapsing as the evidence rolls in.

The “conversation” was a nice idea. It would be lovely if
consumers were as eager to share their enthusiasm for our brands as we are. Sadly,
they have other things on their minds.

2 comments:

ChrisPollard77
said...

Do wish you had put a 0 in front of that .34 stat from IBM. First time I read it, I saw 34% and thought that was actually more significant than I would have expected. THEN I saw that decimal point in front. 0.34% is a far, far sadder story.

Oddly the social media spending thing came up earlier this week in a board meeting. I was the only one in the room, and on the board, to question whether there was ANY value or return from any of the spending that was done in the past on Facebook. The answer was simply that boosted posts reached 600% more people. So I asked, "Did that turn into ANY measurable increase in customers or sales?" The answer was no. So my question was, "then why would we spend more money on it when you just noted that we had drastic spikes in customers/sales any time we were mentioned on the radio locally?" Didn't get any response to that one.

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